Apple is the latest technology company accused of avoiding U.K. taxes, as the company is said to have paid &pound;10 million in corporation tax last year on estimated sales of &pound;6 billion.

Apple was targeted in a new report by the Daily Mail, which noted that the company has a major operation based out of Ireland to take advantage of its low tax rate. The tax rate in Cork is just 12.5 percent, or about half the 24 percent corporate rate in the U.K.

Apple is also said to have an offshoot based out of the Caribbean, where tax rates are favorable in the British Virgin Islands.

The attention on Apple's taxes comes as rival Amazon is under investigation from the U.K.'s HM Revenue &amp; Customs after it was discovered that the online retailer did not pay any British corporation tax in 2010 or 2011. Amazon was able to avoid taxes after switching its European headquarters to Luxembourg.

Google has also been called out for basing its operations out of Ireland for tax purposes, while also bringing money to the U.K. through the Netherlands and Bermuda.

Apple Retail U.K. Ltd was found to have paid taxes of &pound;3.79 million on sales of over &pound;500 million in the fiscal year that concluded in 2010, according to the report. Apple's other primary subsidiary, Apple (U.K.) Ltd., paid another &pound;6.1 million in taxes on sales of nearly &pound;69 million.

Apple's total revenues from the U.K. are not officially known, but it's estimated that the country accounts for 10 percent of the &pound;63 billion the company earned in 2010. That would mean Apple paid about &pound;10 million in taxes on sales of around &pound;6 billion.

Taxes have also been an issue for Apple in the U.S., where the company has called for a repatriation holiday that would allow it to move some of its cash hoard back to the U.S. at a favorable tax rate. Apple has asked the company for an incentive to move its cash, two-thirds of which is housed overseas, back into America, but the requests have gained little traction within the government.

Taxes in most countries are so complex that it's easy to have a dispute with a taxing authority even with the best of intentions. Furthermore, there's plenty of evidence that taxing authorities go after things that they don't really think they'll win in the hopes that they'll collect some of the time.

In the end, either Apple owes money or they don't. If they owe, they'll pay and fix their procedures. Unless someone has evidence that Apple intentionally goes out of their way to cheat taxing authorities, it's a non-story.

Worthless click-bait article.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

Seriously, they report this like it is something unusual. Naturally they chose international companies with the highest public profiles to report on, consistent with their desire to pull hits. Then of course you can read about how Kim Kardashian should be a Bond girl with her "hour-glass" figure and full make-up for swimming in the ocean.

If you are going to insist on being an ass, at least demonstrate the intelligence to be a smart one

For a minute, I thought "how can they be including the gross sales numbers when talking about taxes - taxes are on profits!", but then remembered it's Europe. And then people wonder (and complain) that the same products cost more over there... \

(Ignoring that taxes aren't on profits if you have the right connections and tax shelters, but you know what I mean...)

For a minute, I thought "how can they be including the gross sales numbers when talking about taxes - taxes are on profits!", but then remembered it's Europe. And then people wonder (and complain) that the same products cost more over there... \

(Ignoring that taxes aren't on profits if you have the right connections and tax shelters, but you know what I mean...)

But taxes are on profits in Europe.
Please, be educated before throwing anything in the wild.

Considering your line of reasoning, you sure must feel that a job as kapo in the concentration camps was an improvement above being sent to slave labour. However, I doubt it that neither the kapo, nor the poor guy sent to exhaust himself on the job must have felt that his position was actually satisfying.

It's worth mentioning that this article comes from the Daily Mail, a tabloid newspaper who's very reason for being is to provoke outrage, no matter what the facts of a case really are.

As a UK resident, it doesn't bother me one iota if Apple has arranged its affairs, entirely legally it would appear, so that they minimise their tax liability. No sane human would have it any other way, surely? Who would want to pay more tax than they absolutely had to? It's not like governments are particularly good at spending money wisely...

This is just another case of whipping up public indignation for the purposes of selling newspapers.

more disturbing is the way that when caught in blatantly criminal avoidance they negotiate special deals with the man from the hmrc (uk tax authority) to pay far less than the amount they avoided, with hmrc breaking its own guidelines and then hiding the fact that they did it

i.e. vodafone, infamous for running billions of pounds of business through a couple of rented rooms offshore and a part time swiss accountant, perhaps the most profitable man on the planet

""By March 2011 the total earned in this way had hit $10.2bn and will by now be around $12.5bn, or £7.5bn. All earned by a company showing, in its latest accounts, a total wage bill of $8,000!""

For a minute, I thought "how can they be including the gross sales numbers when talking about taxes - taxes are on profits!", but then remembered it's Europe.

Corporate taxes are on profits in Europe too. Sales numbers are irrelevant.

It is obvious that due to VAT (sales tax) receipts, consumers paid a lot of tax on sales of Apple products. The UK made good money from $6b sales. But this news is about tax on profits.

Europe, just like the US has a bunch of tax rules which means companies pay accountants lots of money to creatively find loopholes to reduce their corporate tax burden. Sounds like good business to me!

The UK is suffering here because companies like Apple are choosing to base their business outside of the UK due to lower corporate tax rates elsewhere. Not much they can do unless the loopholes are not there and the accountants have got too creative.

Seriously, they report this like it is something unusual. Naturally they chose international companies with the highest public profiles to report on, consistent with their desire to pull hits. Then of course you can read about how Kim Kardashian should be a Bond girl with her "hour-glass" figure and full make-up for swimming in the ocean.

Quote:

Originally Posted by Gatorguy

FWIW, the article also states that Apple was audited for it's US 2007-2009 returns and is apparently negotiating additional tax liabilities. No mention of amounts.

"The companys accounts for 2007 to 2009 are being examined by the Internal Revenue Service the U.S. equivalent of HM Revenue & Customs.

An audit of its federal income tax returns resulted in certain adjustments being proposed, some of which it is appealing against."

Nothing unusual about that.

These. This is all standard form with every company, especially the big ones. Standard tactics, from both sides.

Hell, pretty much every major bank in the US has its base of operations in one of like 4 states, Delaware being the most common, due to tax reasons. It might be tacky but its not illegal.

Depends. If they're accused of mis-reporting the value added tax, it is based on sales.

We're talking about income tax, not VAT, which, by the way, is always based on gross sales
(it's a tad more complicated than that, but I don't want to blow some fuses in you as you already seem to struggle).

Tax rates are setup to afford things that taxpayers money is used for like quality healthcare, education etc. When corporations avoid paying their fair share, they diminish the quality of those services. There's no reason why corporations should be allowed to avoid it when individuals can't.

Apple makes about 25% profit on their earnings so £1.5b profit in 2010 on which they supposedly paid £10m tax.

It seems they paid 24.3% in the US instead of 35% so this report may be out.

The claim is that they used Irish and Virgin Islands subsidiaries to pay 12.5% tax instead of the UK 24% so they presumably ought to have paid at least:

£1.5b profit x 0.125 = £188m.

"Documents from one of its two main UK divisions, Apple Retail UK Ltd, show it paid tax of just £3.79million on sales of more than £500million in the year to September 2010, the latest accounts available.

Another subsidiary, Apple (UK) Ltd, paid £6.1million in tax on sales of just under £69 million."

^ this highlights where the miscalculation is coming from. They are estimating that the UK makes 10% of the worldwide sales so £6b total and then adding up recorded taxes of £10m and lumping them together.

The reality is £9.89m tax on £569m sales (~£142m profit) = 7% tax.

Still far off the 24% UK tax rate, which should be applied for UK sales so something is up but that's what investigations are for.

The other UK sales that make up the 10% of the worldwide total must be recorded some other way but it seems odd that only £569m would be recorded in the UK. How can you record over 90% of your sales outside a country you sell in?

Tax rates are setup to afford things that taxpayers money is used for like quality healthcare, education etc. When corporations avoid paying their fair share, they diminish the quality of those services. There's no reason why corporations should be allowed to avoid it when individuals can't.

Apple makes about 25% profit on their earnings so £1.5b profit in 2010 on which they supposedly paid £10m tax.

It seems they paid 24.3% in the US instead of 35% so this report may be out.

The claim is that they used Irish and Virgin Islands subsidiaries to pay 12.5% tax instead of the UK 24% so they presumably ought to have paid at least:

£1.5b profit x 0.125 = £188m.

"Documents from one of its two main UK divisions, Apple Retail UK Ltd, show it paid tax of just £3.79million on sales of more than £500million in the year to September 2010, the latest accounts available.

Another subsidiary, Apple (UK) Ltd, paid £6.1million in tax on sales of just under £69 million."

^ this highlights where the miscalculation is coming from. They are estimating that the UK makes 10% of the worldwide sales so £6b total and then adding up recorded taxes of £10m and lumping them together.

The reality is £9.89m tax on £569m sales (~£142m profit) = 7% tax.

Still far off the 24% UK tax rate, which should be applied for UK sales so something is up but that's what investigations are for.

The other UK sales that make up the 10% of the worldwide total must be recorded some other way but it seems odd that only £569m would be recorded in the UK. How can you record over 90% of your sales outside a country you sell in?

Wow... more made-up stuff. I never understand why people just write junk that has no real bearing on the article. Apple is a BIG business, I'm sure they consult very good tax people in the UK on how to manage the tax bit. Nothing wrong with that. All big companies do that. If the amount is unfair then they should change the laws in the UK.

This is no news. I would say almost every big companies and rich people too mind (just ask Lord Ashcroft et al), do this in the UK. Part of the blame lies on the political and geographical factors but mostly, sovereignty and economic. That's why there is tax incentive in some part of the regions/countries for example. These companies are obviously just taking the offer with the offering parties needing their presence to get an edge over other things like employment etc.

This (as is usual with the Daily Mail) is even more of a non story that it at first seems.

Note first that the headline specifies that they are accused of AVOIDING tax, not EVADING tax. So what is the difference?

Quote:

Tax noncompliance describes a range of activities that are unfavorable to a state's tax system. These include tax avoidance, which refers to reducing taxes by legal means, and tax evasion which refers to the criminal non-payment of tax liabilities.

"Apple, Amazon, Google believed to be saving money on taxes by using totally legal methods in the UK"

or even

"Apple, Amazon, Google not complete idiots when it comes to paying tax in the UK"

or perhaps

"Apple, Amazon, Google paying the taxes they are legally required to in the UK"

Setanta

Yes, there is a big problem of loopholes in tax laws.
The thing is, it's quite complicated to create laws intended for a specific purpose from which an advantage is not taken off that wasn't considered in the first place.

For instance, here in Belgium, we have the concept of notional interest. This concept levels the proper capital (not bearing interest) of a company to debt (interests are deductible). Well, notional interest would mean that a fictuous 3% of the proper capital is considered as deductible interest, the purpose of which was to reinforce the balance sheet of SME's.

Now the thing is, that big corporations created fiscal constructions involving 2 or more companies, lending money from each other and "creating" proper capital. That way they'd win both sides: through the deductible interest and with the notional interest.

What I'd suggest is that next to a law, the gist of it, the purpose of it would also have to be published the purpose of it being that a judge would be able to uphold specific cases against the purpose of a law.

Lawyers will claim that this can create arbitrary ruling. However, these arbitrary rulings already exist. On the contrary, the rulings would be more in line with democratically voted laws because everybody now would know how a law needs to be interpreted iso of interpreting a law along a person's needs and profiting of all the loopholes. BTW: if someone thinks you can close all the loopholes in a law, think again and read Gödel.

For a minute, I thought "how can they be including the gross sales numbers when talking about taxes - taxes are on profits!", but then remembered it's Europe. And then people wonder (and complain) that the same products cost more over there... \

Corporation tax in the UK is on net sales (i.e. profits). The article is extremely badly written by someone with no idea about tax law - that should be expected given it's a blog.

The cost of the product is not higher to make up for the tax Apple don't pay, it's partly down to VAT (paid by the retailer), infrastructure costs, distribution costs and supply/demand. Incidentally, the iPhone 4Gs can be had for free with a contract that will cost you less than AT&Ts over the same time period, so not every product is more expensive. Don't let your prejudices or what you watch on Fox get in the way of reality.

Apple is a BIG business, I'm sure they consult very good tax people in the UK on how to manage the tax bit. Nothing wrong with that. All big companies do that.

That's what I was saying, it seems to be ok as long as everyone else does it. Perhaps we should find more loopholes in the law so that every citizen can benefit from such privileges. Imagine a world where we all pay next to no taxes. Everybody wins right?

That's what I was saying, it seems to be ok as long as everyone else does it. Perhaps we should find more loopholes in the law so that every citizen can benefit from such privileges. Imagine a world where we all pay next to no taxes. Everybody wins right?

Companies are expected to follow the law. There's no evidence that Apple has failed to do so.

If the law allows me to take a tax deduction for wearing a blue shirt on Tuesdays, then I am well within my rights to do so. It would also be well within your rights to object to that law and try to get it repealed.

The tax code needs to be simplified. What you're seeing here is almost certainly simply a matter of complexity and disagreement over what some of the laws mean. Tax law should be simple, clear, and easy to enforce. The fact that it isn't is clearly the government's fault, not the companies who are struggling to comply.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

I'm not surprised. Apple is just another greedy, tax dodging big corporation. It's about time Cameron & Osborne stopped pissing about and started closing down the loopholes that let corporations get away with this. The average person or small business are taxed left, right and centre here but big corporations keep getting away without paying their fair share year after year. It makes my blood boil.

Absolutely. If the "cheap labo(u)r" is a willing participant, and the wages are paying for their food, shelter, and family, and working conditions and standards exceed (not by much, necessarily) those of the country in which the labor is located.

Tim Cook is gay, believes in climate change, and cares deeply about racial equality. Deal with it (and please spare us if you can't).

This is not the issue. The UK is suffering because companies are alledgedly funneling the money back into the UK without declaring it. Like in the US, foriegn profits are subject to a tax when entering the Country.

Some people suggest this is unfair. However, 1) the tax gets ridden off in the Country where the profit was made (thereby lessening the tax libility), and 2) those taxes fund the taxing Country's foreign operations.

Since it is largely companies who benefit from a Country's foriegn operations, it seems fair the companies pay to support said operations.

Quote:

Originally Posted by realwarder

The UK is suffering here because companies like Apple are choosing to base their business outside of the UK due to lower corporate tax rates elsewhere. Not much they can do unless the loopholes are not there and the accountants have got too creative.

I'm not surprised. Apple is just another greedy, tax dodging big corporation. It's about time Cameron & Osborne stopped pissing about and started closing down the loopholes that let corporations get away with this. The average person or small business are taxed left, right and centre here but big corporations keep getting away without paying their fair share year after year. It makes my blood boil.

If the law allows me to take a tax deduction for wearing a blue shirt on Tuesdays, then I am well within my rights to do so. It would also be well within your rights to object to that law and try to get it repealed.

Laws are rules that are set in black and white to define, as close as we can, a common sense of ethics. If a law about wearing a blue shirt on Tuesday was tax deductible for special reasons and a corporation enforced that all employees wore blue shirts every Tuesday for the purposes of tax relief then it's a clear abuse of the law.

Yes the law is partly to blame just as it is partly to blame for allowing a large number of criminals to receive reduced sentences but is our reaction when we read about a child molester receiving a 1-year sentence through a plea-bargain that they just complied with the law and got away with it?

There's nothing we can do about it but we don't applaud them and look forward to whatever abuses tomorrow brings. Laws will always be insufficient to govern people but there is an expectation that people have the decency to comply with them without force.

Quote:

Originally Posted by jragosta

the companies who are struggling to comply.

Yeah, I'm sure all the companies are desperate to pay their taxes but the complexity is holding them back and only allowing them to pay a fraction of it. Presumably this complexity is what drives them to simpler tax codes in places like Luxembourg, Monaco, The Channel Islands etc.

I would put it to you that it is more complex to register a company outside of the country you trade in to receive a reduced tax rate than it is to comply with any given country's tax code.

The UK is smaller than Michigan and its economy sucks. They should be glad that any company does business there. If the UK starts hitting on all these international companies to prop up their failing economy everyone will just relocate. The VAT (sales tax) in the UK is 20% and everything cost 2-3x the price in the states. How can the UK government even hope to survive if they make life impossible for companies to do business there.

The UK is smaller than Michigan and its economy sucks. They should be glad that any company does business there. If the UK starts hitting on all these international companies to prop up their failing economy everyone will just relocate. The VAT (sales tax) in the UK is 20% and everything cost 2-3x the price in the states. How can the UK government even hope to survive if they make life impossible for companies to do business there.

You don't have a bloody clue what you are talking about. Michigan is a shithole. You can't compare the UK to a US state. The UK economy is doing better than the US economy thank you. We don't have a trillion dollar debt. We don't have 50 million people without healthcare. It's very easy to do business here, you don't have as much red tape as other parts of Europe. We have no need to be grateful. Companies do business here because they make a lot of money.

What we lack is a government willing to crack down on tax avoidance by big corporations and wealthy individuals. Frankly I don't care if they all piss off where they came from, they don't contribute much to our country anyway if they're avoiding tax.

Why should the UK care about the survival of a company that does NOTHING for it? The only tax money Apple generates in the UK comes from VAT, which is collected from consumers. Apple pays practically NOTHING on its massive profits. When I make profits, they're taxed. I don't see why big companies should be treated any different. And believe me, even if they have to pay 25% tax to inland revenue they will still be thrilled to be doing business in the UK. It's about time big business pays its fair share instead of getting a free ride on the back of the little guy, just because they can afford lobbyists.

Absolutely. If the "cheap labo(u)r" is a willing participant, and the wages are paying for their food, shelter, and family, and working conditions and standards exceed (not by much, necessarily) those of the country in which the labor is located.

Again, read the analogy between what you've written down and the situation of the kapo and the slave labour in a concentration camp.

Then think about what you've written. Your kind of reasoning actually makes people comfortable with the thought of child labour.

It's more complicated to start a business in the rest of Europe than in the UK but then again, in the UK you're not quite certain of the solvency of a business.

There is absolutely no flexibility in the way the English do business. They have their rules and there is not the slightest room for any adaptation to the customer: the customer adapts to the supplier, always. If you're trying to do business with a UK company as a foreign business, the situation is even worse as the English are xenophobic and still feel like 'Britannia rules', whatever that may be.
In the meantime, London is getting slumpier by the minute (except for the Stratford area where the London administration injected a massive 15 Bio GBP). The only thing working in London is the Tube as long as they're not on strike (again) or that Circle or Bakerloo or Jubilee is not broken somewhere.

It's more complicated to start a business in the rest of Europe than in the UK but then again, in the UK you're not quite certain of the solvency of a business.

There is absolutely no flexibility in the way the English do business. They have their rules and there is not the slightest room for any adaptation to the customer: the customer adapts to the supplier, always. If you're trying to do business with a UK company as a foreign business, the situation is even worse as the English are xenophobic and still feel like 'Britannia rules', whatever that may be.
In the meantime, London is getting slumpier by the minute (except for the Stratford area where the London administration injected a massive 15 Bio GBP). The only thing working in London is the Tube as long as they're not on strike (again) or that Circle or Bakerloo or Jubilee is not broken somewhere.

What a load of anti-British clap trap. What country do you live in?

Why don't you provide some evidence to back up your claims if you can find any.

Why don't you provide some evidence to back up your claims if you can find any.

I've recently started my own business in England so I know how it is.

Congrats to you and good luck. You'll sure need it.

What does the country I live in matter to you? The thing is I did business for over 3 years with the UK. And it's like I said, period. But you're not the worst people, there are still the Chinese to try and f... a non-native.

BTW:
1) are the water fountains already closed or are they still running?
2) The only thing I miss about the UK would probably be LBC with Nick Ferrari and James O'Brian. So yes, I know some of everyday life in the UK and how the Brits are with the foreigners.

What does the country I live in matter to you? The thing is I did business for over 3 years with the UK. And it's like I said, period. But you're not the worst people, there are still the Chinese to try and f... a non-native.

BTW:
1) are the water fountains already closed or are they still running?
2) The only thing I miss about the UK would probably be LBC with Nick Ferrari and James O'Brian. So yes, I know some of everyday life in the UK and how the Brits are with the foreigners.

Its interesting that you chose to hide behind your anonymity so we all have no idea what country you either come from or live in now. If you think your home country is better then dont hide.

The fact is the UK is no different to any other country. If you make an effort and assimilate with the local culture you will get on just fine. There are good and bad people here just like everywhere else.